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NOTE ON WAGE REVISION PROPOSALS

We are in the process of preparing memorandum, to be submitted to the management, on the forthcoming wage revision. It is our desire that a single common memorandum of all the unions should be submitted to the management, for which we have to evolve a consensus. As a first step in this direction we have finalized certain proposals. This will be discussed with our alliance partners as well as unions which are outside the alliance, based on which the final memorandum will be prepared. We hereunder give the first part of our proposals, relating to pay scales. Members are welcome to give their suggestions.I. BSNL is one of the best PSUs but pays least to its employees1. A study of 11 PSUs BSNL, MTNL, TCIL, ONGC, BPCL, HPCL, IOC, NTPC, Power Grid, BHEL and SAIL is made for the financial year 2005-06. Various parameters enabling a comparative study of these 11 PSUs are given in the annexure as tables 1 to 6. 2. BSNL got the MOU rating excellent along with ONGC, HPCL, IOCL, Power Grid, BHEL and SAIL where as MTNL, TCIL, BPCL and NTPC have got the MOU rating very good (Table-1). 3. BSNL tops among these 11 PSUs in case of Gross Block, Net Block, Reserves and surpluses, capital employed and number of employees (Table 1).

4. BSNL is in 2nd position in case of net profit among these 11 PSUs (Table 1). In factBSNL is in 2nd position among the top 10 profit making PSUs (Table 3).

5. Among these 11 PSUs, BSNL is in 5th place in case of net revenue after IOCL, BPCL,HPCL and ONGC (Table 1). But it is to be noted that most of the revenue in IOCL, BPCL and HPCL is due to the inclusion of the cost for purchase of finished goods/consumption of raw materials. For example, in case of BPCL, the net revenue is Rs. 77036 crore in which the cost for purchase of finished goods/consumption of raw materials Rs. 71350/is included. In case of ONGC, its monopolistic position explains the large revenue. Without any of these helping factors, BSNL got net revenue of Rs. 36139 Crore and hence in real terms, it is to be treated as number one. 6. BSNLs share in total 225 PSUs is 19% in reserves & surplus, 18% in Gross Block, 19% in net block, 15% in capital employed, 13% in PBDITEP (Profit before depreciation, interest, taxes, extra ordinary items and prior period adjustments), 13% in net profit, 20% in number of employees and 4% in turnover. (The reason for the apparent low level in turnover is explained in para 5 above).

2 7. In the Ranking based on relative performance in the year 2005-06 compared to 2004-05,BSNL got 57th rank among 124 PSUs (Table 4). But it is to be noted that BPCL got 51 st and HPCL got 60th rank although their MOU ranking is excellent, like BSNL. 8. The rate of gross surplus created in these 11 PSUs is given in table 5. This is arrived by the formula PBITEP/WAGES X 100. PBITEP is the gross profit after deducting depreciation cost. The cost of labour power is indicated by the wages and the gross surplus created by the labour power is indicated by PBITEP. In the rate of gross surplus in these 11 PSUs, BSNL is better than BPCL and IOCL in the oil Sector and closer to BHEL and SAIL. The enormous surplus of ONGC (1683%), NTPC (830%) and power Grid (778%) is due to their monopolistic position. 9. The rate of net surplus (net profit) generated in these PSUs is given in table 6. This is arrived by the formula Net Profit / wages x 100. The rate of net profit in BSNL is higher than MTNL, TCIL, BPCL, HPCL, BHEL and SAIL. Only due to monopolistic position the ONGC, NTPC & Power Grid rates are higher than BSNL. 10. But the glaring fact is that the average per employee per month wage (Rs. 18914) is the lowest in BSNL among these 11 PSUs. While in the rest of the 10 in these PSUs the average wage is from Rs. 25062 to 61733, in BSNL it is only Rs 18914. It is also to be noted that the wage in BSNL is very low when compared with other telecom PSUs MTNL and TCIL. In VSNL the average wage per year per employee for 2005-06 was Rs. 12, 97,300/-. This means the per employee per month wage in VSNL for the year 200506 is Rs. 1, 08,108/-. II. Parity in wages with Oil Sector PSUs is justified 1. The facts mentioned in Chapter I above clearly establish that BSNL is comparable to Oil Sector PSUs in respect of several parameters and therefore the wages of BSNL Employees have to be on par with Oil Sectors PSUs like ONGC, HPCL, IOCL or BPCL. The fact that the wages in these Oil Sector PSUs will be revised significantly from 01-012007 is also to be taken into consideration. It is also to be noted that in other public sector telecom service companies MTNL and TCIL and also in the recently privatized VSNL the wages are very high compared to BSNL. 2. The Department of Public Sector Enterprises in its circular No. 2(50)/86-DPE(WC) Dated 19-07-1995 has stated: Public Sector Enterprises are considered as State under the provisions of article 12 of the constitution of India. Both the Supreme Court and the various High Courts have given directions in the recent past either for restoration of parity in the scales of pay in one PSE with that of another PSE or removal of anomalies. In order to

3avoid further litigation, it has, therefore, been proposed that the scales of pay of the incumbents of the top posts, executives holding posts below the board level and nonunionised supervisors would be similar in all PSEs irrespective of profit or loss made by them. 3. When the executives of other sectors are treated on par with Oil Sector irrespective of profit or loss, the same parity has to be applied to non-executives. Moreover, in view of being one of the best among PSUs, the BSNL has no ground to deny parity in wages with oil sector. III. Logical Relativity with Executives has to be improved The ratio between the lowest pay of non-executives with the highest pay of executives was 1:19 in 1970 in public sector, before the starting of centralized collective bargaining. After 5 rounds of wage agreements once in every 5 years, by 1996 this relativity was improved to 1:4.7. But in the 6th round of wage revision that came into effect from 01-01-1997, the non-executives were discriminated and the executives were highly favoured. As a result the above said relativity in wages has deteriorated from 1:4.7 to 1:7. we demand that this discrimination should be ended and the logical relativity in wages between non-executives and executives should be improved. IV. Projected Revenue of BSNL 1. As per the statement of the honorable Minister of Communications Sri Dayanidhi Maran on 02-01-2007, BSNLS turnover will reach Rs. 90,00,000 crores (20 billion dollars) by 2010 and in the year 2008 it will be given Navaratna status. 2. Therefore with such increase in revenue and with available huge reserves and surplus, there is enough scope for granting wages to BSNL Employees on par with Oil Sector PSUs. V. Factors to be considered in evolving Proposed Pay Structure 1. The following factors are taken into consideration in proposing the pay revision: a) Parity in wages with Oil Sector. b) Increase in wages in oil sector in proposed wage revision from 01-01-2007. c) Necessity for improving the logical relativity in the wages of non-executives and executives. d) The level of minimum wage should be on par with need based minimum wage and the level of minimum wage in PSU should be higher than this to maintain existing relativity.

4e) The necessity for merger of D.A with pay after crossing 50% has to be taken in to consideration since the last wage revision from 01-01-1997 was given effect for long tenure of 10 years. f) The necessity for implementing the concept of 5 promotions. g) The necessity for upgradation of pay scales of various cadres.

VI. The proposed pay structure for BSNL Employees 1. As per the norms fixed by the 15th Indian Labour Conference, the need basedminimum wage was calculated by confederation of Central Government Employees and the amount was Rs. 10,000/-. Thus Rs. 10,000/- has to be fixed as the minimum pay in case of Central Government Employees. As on 31-122006 the pay + DP + DA of Central Government Employee at minimum level is Rs. 2,550/- + Rs. 1,275/- + Rs. 1,109/- = 4,934/-. In case of BSNL Employees the pay + IDA as on 31-12-2006 at minimum level was Rs. 4,000 + Rs. 2,608 = Rs. 6,608/-. Thus the pay + IDA at minimum level in BSNL is 1.34 times that of the pay + DP + DA in Central Government at minimum level. Therefore to maintain relativity between Central Government and BSNL, the need based minimum pay of Rs. 10,000/- is to be multiplied by 1.34 to arrive at the minimum pay in BSNL. Therefore in place of the present minimum pay Rs. 4,000/- in NE 1 scale of BSNL Employees is to be increased to 13,400/- (10,000 X 1.34).

2. The 4th pay commission has fixed minimum pay of Rs. 750/- for CentralGovernment Employees. The 5th pay commission has fixed this as Rs. 2,550/which is 3.4 times more than Rs. 750/-. On the same analogy, the minimum pay of Rs. 4,000/- in BSNL has to be increased by 3.4 times. Therefore Rs. 13,600/(4,000/- X 3.4) is justified as the minimum pay from 01-01-2007 instead of the existing minimum pay of Rs. 4,000/-.

3. In public sector undertakings, wage revision has taken place every 5 years until5th round of wage revision. But the 6th wage revision that came into effect from 01-01-1997 was given 10 years tenure and hence the 7th wage revision has become due from 01-01-2007. This delay of 10 years for wage revision was unjustified and caused loss. Although this loss may not be totally compensated, at least merger of 50% IDA with pay for all purposes is justified. It is to be noted that for central Govt Employees for whom the 5th CPC wage revision was

5effective for 10 years from 01-01-1996, The Govt has agreed for 50% DA merger. Therefore the merger of 50% IDA with pay has to be considered for all purposes including grant of IDA for BSNL Employees. In such case as on 31-122006 Rs. 2,000/- (50% IDA) has to be merged with the minimum pay of Rs. 4,000/- and the total comes to Rs. 6,000/- (Pay + Dearness pay). Out of IDA of 65.2% due on 31-12-2006, if 50% is to be merged with pay, the balance will be 15.2% which is to be granted on Pay + DP. Thus the Pay + DP + 15.2% IDA on (Pay + DP) will be Rs. 6,900/- (Rs. 4,000/- + Rs. 2,000/- + Rs 900/-). The average wage per employee per month in ONGC is Rs. 30,540/- in the year 2005-06. In MTNL it is Rs. 31,052/-. In BPCL it is Rs. 52,946/-. In TCIL it is Rs. 61,733/-. In BSNL it is only Rs. 18,914/-. Thus in these other comparable PSUs the average wage is already around 65% more than BSNL. The wages in these PSUs will further increase from 01-01-2007 due to 7th wage revision. Therefore taking these factors in to consideration the Pay + 50% IDA (DP) + 15.2% IDA on (Pay + DP) as on 31-12-2006 in BSNL is to be increased twice by granting 100% Fitment Benefit to arrive at the minimums of the pay scales to be granted from 01-01-2007.

4. On this basis, the following will be the pay (merged) + DA on 31-12-2006 on theminimums of the existing 11 non-executive scales and first 3 executive scales:

5. The amounts in col.6 in the above table are to be increased twice to grant proposed 100% Fitment Benefit and on that basis the minimums of the proposed scales are to be fixed, in order to grant parity in wages with oil sector, (after taking into account the proposed wage revision in oil sector w.e.f 01-01-2007). Therefore the following minimums are proposed for the pay scales coming into effect from 01-01-2007:

6. It is proposed that the pay scales are to be open-ended, with grant of 8% increment annually, and cumulatively, on basic pay. The existing minimums of NE-2 and NE-3 are 4060 and 4100 with a negligible difference of Rs. 40/-. In their equivalent scales proposed above also the difference is Rs. 200/- only. Therefore it is proposed to merge the NE-2 and NE-3 scales. Hence the following open ended scales are proposed.